Elio Motors showed off its quirky, highly fuel-efficient, and cheap three-wheeled car way back at CES 2015, but the startup has struggled mightily since. Today, it has received a bit of a lifeline. Online retailer Overstock.com announced that it’s buying $2.5 million of newly issued shares of Elio’s common stock. (Elio shares are traded on the OTC market.) The money will, in part, help pay off Elio Motors’ “outstanding debt and accounts payable.”
Elio Motors also announced today that it will launch a token-based offering called ElloCoin in order to fund production, which it still plans to get rolling in 2019. Instead of an initial coin offering, or “ICO,” the company will launch a “security token offering” facilitated by JonesTrading, with the tokens only initially available to “accredited investors.”
Elio Motors needs money — lots of money
For a while, the pitch for the Elio Motors three-wheeler proved to be an attractive one. Around 65,000 customers put down a reservation, which cost anywhere between $100 and $1,000. The car, which the company just calls Elio, forces consumers to trade the luxury and convenience of a more normal-sized car. But in return, they get one that promised up to 84 miles per gallon for under $8,000.
Unlike most of the other futuristic or environmentally conscious car startups that show up at CES, Elio buyers could still fill up their ride at a traditional gas station. Unfortunately for Elio Motors, it still ran into many of the same problems as those other car startups. The company had trouble raising the hundreds of millions it believed it needed for production, which led to a delay. At the same time, Elio Motors quickly burned through the cash it had raised. The company had mere thousands of dollars in the bank last summer with debts totaling in the tens of millions. Elio Motors had to furlough a “significant portion” of its workforce to stay afloat as it searched for around $100 million in funding.
Elio Motors has a lease on an old GM manufacturing facility in Shreveport, Louisiana, but its lack of funding (and therefore lack of work) led to tension with the community there, according to a late 2017 investigation by Jalopnik.
Despite the company’s troubles, that original promise — a small, cheap car with big MPG — seems to be what wooed Overstock.com into investing, according to the press release. Founder and CEO Patrick Byrne said he “was in awe” after just five minutes in the car. “I am confident that this will become my car for at least two-thirds of the days I drive,” he said. Byrne also said he believes in Elio Motors’ vision, calling the vehicle “a win for America.”